January 3, 2023 - Despite the pressure from the West on countries to jettison the use of coal, the world’s largest mining companies of the commodity tripled their profits in 2022 to reach a total of more than $97 billion, defying expectations for an industry that was thought to be in terminal decline.
As global demand for the fuel rose to record levels, total earnings from coal operations at the world’s 20 largest coal miners reached $97.7 billion during the most recent 12-month period for which financial information is available, compared with $28.2 billion during the same period a year earlier, according to Financial Times research and data from S&P Capital IQ.
Many countries that once pledged to quit coal have turned back to it as a reliable source of heat and power as energy security concerns became a top priority following Russia’s invasion of Ukraine.
The biggest money makers were Glencore, whose coal earnings were $13.2 billion in the 12 months ending on June 30; China Shenhua, which made $12.2 billion during that time; and BHP, which brought in $9.5 billion, mainly from production of metallurgical coal.
Just a year after the UN COP26 climate summit pledged to “phase down” coal, demand for the fossil fuel has instead grown, boosted by high gas prices and the European energy crisis. Global coal demand rose 1.2 per cent to reach a record high in 2022, according to the International Energy Agency (IEA).
In 2022, the benchmark price for high-quality thermal coal in Europe was $295 on average — double the levels of the previous year, and nearly four times higher than the average price between 2010 and 2020, according to Argus Media.
As a result, coal mining companies have experienced a huge and unexpected improvement in their fortunes.
The coal division of Anglo American, the world’s fifth-largest producer outside China of the metallurgical coal used in steelmaking, swung from losses of $34 million in the 12 months ending on June 30 2021 to earnings of $2.5 billion a year later.
The biggest increase in coal profits was at BHP, where they surged 3,200 percent, from $288 million in the 12 months ending on June 30, 2021 to $9.5 billion a year later. BHP is the world’s largest producer of metallurgical coal outside China.
At Glencore, coal earnings rose to $13.2 billion, compared with $1.2 billion during the same period a year earlier, the Financial Times report said.
Before the boom in coal prices, many of the biggest miners outside of China and India were busy paring back their coal operations.
This was the rationale behind the decisions of BHP and Anglo American to dispose of their respective stakes in the Cerrejón coal mine in Columbia, which exports high-quality thermal coal to Europe, the report added. In January, they sold their combined 66 per cent stake to Glencore for $101 million in cash and other considerations, giving the Switzerland-based commodities group, which already owned 33 percent, full ownership of the asset.